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Iran retaliated for Israel’s ground invasion of Lebanon yesterday, sending crude sharply higher. The geopolitical question now lies in the extent of Israel’s response.
Yesterday’s Close: Settled at 69.83, up 1.66 [+2.44%]
Iran retaliated for Israel’s ground invasion of Lebanon yesterday, sending crude sharply higher. The geopolitical question now lies in the extent of Israel’s response. Italy has called an emergency group of 7 meeting to discuss the situation as Israel has vowed to retaliate for Iran’s attacks. WTI futures are up another $2.13 to $71.94 this morning after Israel’s threats.
OPEC meets this morning for a joint ministerial monitoring meeting. Fireworks are not expected, but we hope to clarify Saudi Arabia’s attitude towards production ramps after the Financial Times article last week, which we discussed here.
Yesterday’s API report was as follows [bbls]:
- Crude: -1,500k
- Gasoline: +900k
- Distillate -2,700k
Estimates for today’s EIA report [bbls]:
- Crude: -1,430k
- Gasoline: +200k
- Distillate –2,000k
ARA data showed crude inventories fell -1,700k bbl. [ARA covers the key oil trading regions of Amsterdam, Antwerp, Flushing, and Rotterdam].
The fear in markets is for a continuous cycle of retaliatory attacks between Iran and Israel. Israel may target Iranian oil infrastructure, while Iran could choke off the oil trade at the Strait of Hormuz. If this situation were to come to fruition, oil prices could reach as high as $100. Meanwhile, port shutdowns in the US Gulf will work to slow global supply of refined products as U.S. refineries become shut to global trade.
Traders should use caution and expect volatility. If a truce were to be called between Iran and Israel, and this retaliatory cycle was put to rest, prices could fall sharply. Any significant updates out of the OPEC meeting will be shared to our twitter account.
WTI Crude Oil futures have pinged resistance aligning with the September 3rd fallout and the September 24th high at 72.40-72.65. Above here, we have rare major four-star resistance at...
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On the date of publication, Bill Baruch did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.